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Labour leader Andrew Little has told a Wellington business audience cutting immigration is essential for New Zealanders' "quality of life" and "manacling" new migrants to the regions instead of cities was not working.

Little delivered a pre-Budget speech to the Wellington Chamber of Commerce, saying New Zealand was built on immigration but was now struggling to cope with the numbers arriving.

"None of us would invite 20 people over for dinner if we didn't have 20 chairs for them to sit on. Well, right now our cities don't have enough chairs.

Yes, there are some regions of the country who need more migrants, but the larger problem is the infrastructure deficit in our cities."

"Taking a breather on immigration is part of investing in every New Zealanders' quality of life, whether they've been here ten generations or ten days."

In the question session afterward, Little said it would take more than simply requiring migrants to live in the regions rather than cities - something he said risked breaching people's rights to freedom of movement anyway.

Those migrants who currently agreed to live in the regions for at least a year to get extra points ended up moving to Auckland when that year was over, which was doing little to alleviate the problem.

"It meant as they passed Auckland, they were going to buy a property, going somewhere else for a year and then moving to Auckland."

He later told media there was 'anecdotal evidence' of that happening but he had not quantified the extent of it.

"The problem with a points system which says 'you go to a region for a year' is because we can't imprison people in different parts of New Zealand."

Little has spoken of a policy to cut net migration by tens of thousands by trimming back work and student visas. He said that policy would be released in the next few weeks.

Little was also asked about recent announcement to phase out tax breaks for property investors.

"That is effectively a handout from taxpayers to speculators. It gives them an unfair advantage."

He said such measures were needed because housing had become too unaffordable for younger generations.

"I think it's every generation's duty to strive to leave a brighter world for our children ... There are a few areas where I worry my generation is falling short in that mission."

He said housing was the single biggest issue facing New Zealand. "taking the magnitude and depth of the housing issues seriously means it has to be tackled on a number of fronts,."

Little also spoke of the Budget Responsibility Rules Labour and the Greens had signed up for in March, saying they provide an assurance a Labour-Green Government would be disciplined and focused.

He told the audience while Labour believed there were areas that needed significant catchup funding, such as a $1.5 billion shortfall in health, it would do that gradually rather than hurl money in immediately.

Little said Labour wanted to lift productivity - but part of that was ensuring new wealth was fairly distributed. "It's not just about what is good for business, It's about what's good for the economy, to lift wages."